KBA Reports Rising Demand, But Will Report a Loss

Tuesday, June 29, 2004

Press release from the issuing company

June 27, 2004 -- In his first annual review to shareholders since being appointed president of Koenig & Bauer AG (KBA) on 1 July 2003, Albrecht Bolza-Schünemann reported a big increase in demand following a three-year downturn in the press engineering industry. The group’s resounding success at a major trade fair, Drupa, in May boosted orders for both sheetfed and web offset presses in the six months to 30 June.
Preliminary figures for the group reveal that the volume of incoming orders jumped approximately 33% to more than €720 million. Sales, however, at around €510m, will be only slightly higher than twelve months earlier following changes in shipping and invoicing schedules. This, coupled with extraordinary expenses relating to Drupa in the second quarter, will result in a group loss being posted in the official interim report due to be issued in mid-August. The improvement in sales and earnings will work its way through to the bottom line in the second half of the year.
No dividend for the first time since 1985
As already reported, group sales in 2003 fell 9% to €1,231.8m due to a general lack of demand. Weaker sales and the cost of restructuring the web press division resulted in a group loss of €30m last year. Since dividends are based on the performance of the parent company, Koenig & Bauer AG, which posted a slightly higher loss of €38.7m, management was unable to propose the payment of a dividend for the first time since the company went public in 1985.
Web division shake-up continues apace
Cost-cutting and efficiency-enhancing measures initiated at KBA’s web press division in spring 2003 continue apace. An assembly plant in Kusel was closed down at the end of last year and one in Berlin (KBA-Berlin GmbH) will follow at the end of this year. Excluding the 300 staff taken on with the acquisition of Metronic in 2003, the group payroll will fall to 6,975 by the end of June, very close to the figure originally envisaged. Organisational workflows have been streamlined, hierarchy levels stripped out and the management board reduced to five by merging sheetfed and web production into a single brief. During the next few months the focus will be on finalising the implementation of a distributed manufacturing system.